How to obtain the best mortgage rate

I am sure you have heard over and over how incredibly low mortgage interest rates are right now. (In fact, you have probably heard this more than once from yours truly. Remember a couple of months ago when I highlighted how much a change of one point in your interest rate can save/cost you [in this blog post]?)

At any rate (no pun intended), some buyers are surprised to find that when they speak with their lender about getting pre-approved to purchase a home, they are quoted a higher interest rate than they expected (or that they have been hearing in the news). The reason for this? The interest rate that a buyer qualifies for is dependent on a number of factors. Therefore, interest rates aren't a "one size fits all" type of thing. However, there are actions that you can take to ensure that you get the lowest interest rate possible.

I found this great article from Inman News, "Meet 4 criteria for best interest rates" that outlines the most crucial factors that lenders are looking for in order to quote you the best possible interest rate! Even if you aren't in the market for a home at the moment, this article is still worth taking a look at, as the financial actions you take now can impact your purchasing power for quite a while!

If you are thinking of purchasing a home, and haven't yet spoken with a lender about getting pre-approved, feel free to contact me and I would be more than happy to put you in touch with a fabuous local lender!

-Jamie Wright, Realtor
Jamie@BurlingtonVermontHomes.com
(802)846-9530

Am I starting to sound like a broken record?

I know I have said it before, but I just can't stress it enough: NOW is a fantastic time to buy a home!! Even though we no longer have the homebuyer tax credit in place, we DO have INCREDIBLY low interest rates (not to mention a great inventory of homes)! With interest rates hovering around 4.75%, buyers are experiencing greater purchasing power (read: they can afford more home for the same amount of money)!

Heather Myott from Coldwell Banker Mortgage did a calculation to illustrate what this increase in purchasing power really translates to, and I thought I would pass it along:

For example, if a buyer is purchasing a $300,000 home and putting down 3.5% with an interest rate of 4.75% for a 30 year fixed rate loan, their monthly payment (of principal and interest) would be $1,544.15.

Now, let's pretend that same buyer waits to purchase the same home until rates have increased to 5.75%. The payment (again, principal and interest) for the scenario- $300,000 purchase price with 3.5% down for a 30 year fixed rate loan BUT with an interest rate of 5.75% would be $1,727.16. THAT'S AN INCREASE OF $183.31 PER MONTH!! (Or, $65,000 over a 30 year loan!)

Now, I don't know about you- but I have a pretty serious shopping habit. So, I translate that $183 a month to at LEAST one outfit! (That's an entire wardrobe by the end of the year!) Of course, depending on your lifestyle, you could view this additional $183 per month a number of ways: you could think of it as one week of day care, one month's cable, telephone, and internet bill, a couple of nice dinners out, a car payment (part of all of it), or even vacation money at the end of the year!!

Continuing on with the example, if the buyer wanted to maintain the payment amount of $1,544.15 in an economy with interest rates 1 point higher than we are seeing now (so, 5.75%), they would only be able to afford a $268,000 home- that's a decrease in 11% in the amount of home they are able to afford!!

Bottom line: if you are thinking of purchasing a home, but don't think you can afford the home that you want, you should probably speak to a lender and determine what you can afford, as you might be (pleasantly) surprised. Do you have a specific home in mind? If so, click here for a mortgage calculator to help determine what your monthly mortgage might be.

You can contact Heather Myott at Coldwell Banker Mortgage at (802)238-1704 or Heather.Myott@MyMortgageFamily.com

As always, you can reach me at (802)846-9430 or Jamie@BurlingtonVermontHomes.com

-Jamie Wright, REALTOR

Low interest rates = increased purchasing power!

By now, virtually every buyer has heard that interest rates are near historic lows....BUT, do you really know what that translates to in terms of your monthly payment or how much home you can afford? The other day Heather Myott from Coldwell Banker Mortgage shared this very enlightening calculation, and I thought I would pass it along!

Take the following scenario for example: If a home has a purchase price of $200,000 and a buyer is putting down 3.5% at the current rate of 5.2% for a 30 year fixed rate loan, a buyer's monthly mortgage payment would be $1,078.33.

Now, take the same example as above, but pretend the interest rate increased by 1% to a total interest rate of 6.200%. The new monthly mortgage payment would be $1,202.75. *That's an extra $124.42 that the buyer is paying EACH MONTH!*

To put a different angle on it: IF at the increased rate of 6.200% the buyer wanted to keep the same monthly payment of $1,078.33 (from the first scenario), the buyer would have to purchase a home for $179,000- THAT'S OVER 10% LESS HOME FOR THE SAME AMOUNT OF MONEY!

If you are considering purchasing a home (and potentially taking advantage of the homebuyer tax credit), a great place to start is by speaking with a well-qualified lender that can tell you exactly how much home you can afford. Feel free to call or e-mail me today, and I can put you in touch with a fabulous lender who can help you get pre-approved QUICKLY!

BOTTOM LINE: Economists are predicting that interest rates will experience modest increases in the second half of this year, so don't wait to start your home search! Although we have no way of knowing precisely when interest rates will rise or by exactly how much, we DO know that interest rates ARE incredibly low RIGHT now! So why risk being able to (potentially) afford 10% less home?!

-Jamie Wright, REALTOR
(802)846-9539
JWright@HickokandBoardman.com